The AUD GBP exchange rate was higher and holding slight gains above the 0.5300 level, but the pair is vulnerable ahead of the latest GDP number. The Aussie economy will show how it was faring heading into the latest lockdown measures and analysts are mixed on the result. The median call is for growth of 0.5% in the June quarter, but forecasts range from a 0.1% fall to a growth of 1.2%.
The AUD to GBP trades at 0.5310 but could slip back to pound strength if the GDP number disappoints.
Australian GDP is likely to show slowing ahead of virus
Australia’s economy was potentially slowing down even before the latest coronavirus restrictions shut down businesses and jobs.
Some analysts are even suggesting the economy is already in a recession if Wednesday’s data on gross domestic product matches the weakest analyst forecast. The median expectation is for growth of 0.5% in the June quarter, but forecasts range from a 0.1% fall to growth of 1.2%.
That would be a further descent from 1.8% in the first quarter and a strong 3.2% in the fourth quarter of 2020.
“For most of the June quarter the Australian economy was travelling well, but then the Delta variant arrived,” said CBA’s economist Gareth Aird.
“For all intents and purposes, the Australian economy is currently in a manufactured recession as we go through another huge negative shock.”
The latest round of lockdowns enforced on Sydney, Melbourne and Canberra has shuttered the majority of the country’s workforce and will hit the latest round of data.
Business commentator Terry McCrann said Australia is economically “worse off” than it was in the early days of the pandemic.
“More businesses are being destroyed, more jobs have been lost, and we’ve spent nearly half a trillion dollars – which is just sort of being wasted.
“It’s just held that tsunami at bay. It hasn’t actually done anything to fix the reality of the economy.”
Australia’s performance in the pandemic was rivalled around the world, but the economy is now in chaos with the controversial “zero-covid” strategy.
WA premier talks removal of border
Western Australia state premier Mark McGowan was talking of the removal of the controversial state borders on Tuesday.
McGowan took a shot at Eastern states that wanted to open up freer movement to the west:
“As I’ve repeatedly said: Western Australia will remove our controlled border with other states in the future, when it is safe to do so, and in line with the health advice and the national plan.
Some people want us to remove our border controls with Sydney when only 70% of adults are vaccinated (which is only 56% of the overall population).
By knowingly letting the virus in, it would mean we’d have hundreds of people die, have to wind back our local freedoms, introduce restrictions, and shut down large parts of our economy. I don’t want to do that.”
The latest news saw ACT extending its lockdown and Melbourne is expected to follow on Thursday as cases also continue to rise in Sydney.